Malaysian stocks fell yesterday as investors reacted to the Budget 2022 announcement just last Friday evening, with the most notable piece of corporate news being the Cukai Makmur, a one-off prosperity tax on companies with annual taxable income of more than RM100mil – the usual 24% income tax will be implemented on the first RM100mil income, while the excess will be subjected to a 33% income tax.

FBM KLCI Down 2% Yesterday

Yesterday morning, the Bursa Malaysia opened lower as investors continued to digest the Budget 2022 which was tabled last Friday evening. Investors had a knee-jerk reaction to the corporate tax rate of 33%, which may reduce FY22 earnings for companies with income over RM100mil, with financials and telcos potentially the hardest hit, and technology and healthcare being the least impacted. There will also be a stamp duty rate increase for share trading from 0.1% to 0.15% along with the removal of its RM200 per transaction cap, raising concerns that the trading volume on Bursa Malaysia may be impacted due to the higher trading costs.

Nonetheless, the RM12.2bil handouts that are allocated for Bantuan Keluarga Malaysia and welfare assistance, among others, should be positive for consumer spending as it may help to boost the economy for reopening momentum. Yesterday, the shares of Bursa Malaysia were down 5.6% to RM7.09 while the broader FBM KLCI fell 2.0% to 1,530.92 points.

Source: Macquarie Research - 2 Nov 2021